Supply chain initiative to tackle challenges of agri-food industry

Tony O'Neill.

Published:08:02Saturday 26 September 2015

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Tony O’Neill, chairman of the Agri-Food Strategy Board (AFSB), has announced the formation of a Supply Chain Forum to help Northern Ireland’s £5 billion agri-food industry develop responses to current business challenges.

The new forum will meet next month and will draw all parts of the supply chain - farmers’ bodies, processing organisations, banks and retailers - together to be better able to respond quickly and effectively to the requirements of marketplace. The forum has been developed by AFSB with support from Agriculture minister Michelle O’ Neill and will be chaired by Mr O’Neill.

Mr O’Neill, commenting on the initiative, said: “Virtually every sector of the farming industry here has been affected adversely by volatile market conditions over the past few months.

“Our industry continues to experience serious difficulties from the continuing impact of the Russian ban on dairy and other foods; weakening demand in a number of key markets, especially China, and others where purchasing power has been hit by tumbling oil prices; the global oversupply of milk; and weather conditions affecting crops such as potatoes, cereals and vegetables.

“The forum is in line with the principal recommendation in the Going for Growth Strategic Action that there should be widespread acceptance of the need for Growing a sustainable, profitable and integrated agri-food supply chain, focused on delivering the needs of the market.

“The first task of the new forum will be to foster a greater understanding of the roles and requirements of all the links in the chain especially the need to ensure our farmers are able to enjoy a decent living, to continue to invest in their farms and to support the food chain with quality products.

“The functioning of the supply chain has also been affected by inconsistent, short term pricing, much of which has been impacted by volatile commodity prices. The impact of this environment means that each component part of the supply chain cannot plan ahead sustainably.

“This has a particular knock-on effect for producers. Selling food below the costs of production doesn’t make economic sense. What it does is to drive even the most efficient farmers to the wall. There needs to be much greater appreciation of farm issues right along the supply chain. Retailers are recognising increasingly that it is in their own interest to deliver a fair return for farmers - without producers, they have nothing to sell. And consumers have to recognise that the days of cheap food are drawing to a close.”

Other issues that forum will address include the need for consolidation within the industry in both primary production and processing, cash flow difficulties and credit for farmers, and financial instruments to reduce risk from market volatility such as futures markets for agricultural products, as well as market opportunities for new products and services that could be developed here.

“Market focus must be central to the forum’s discussions and recommendations,” he added.

How the newly formed industry led Northern Ireland Food Marketing Association, DARD and Invest NI can facilitate the process and the growth of the local industry through more effective market information and marketing programmes will feature on the agenda.

“A key challenge for these bodies will be to encourage and assist the industry to identify and exploit new markets for our products.

“Opportunities to grow our exports of food and agricultural produce continue to exist and will increase in both short and long terms. Drawing the supply chain together and co-ordinating actions will enable us to exploit global opportunities for the benefit of farmers, processors and the wider community.”

He said Going for Growth had tabled a series of realistic targets including a 60 per cent growth in sales to £7 billion and a 75 per cent increase in products sold outside Northern Ireland to £4.5 billion by 2020.

“The forum can help us achieve these targets by spearheading the development of a sustainable, profitable and integrated agri-food supply chain, that’s focused on delivering the needs of the market.”